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MSNBC’s “Morning Joe” took some delight this morning in highlighting a new CNN poll which suggests that Trump’s approval ratings have sunk to an all new low of just 38% among registered voters. 

Of course, it took us all of 30 seconds to find the following details about the polling methodology which reveal that CNN did nothing more than produce yet another “fake poll” courtesy of aggressive “oversamples” designed to goal seek their desired results…but who cares?  Alas, a 30/25/42 split between Democrats, Republicans and Independents is no where near the actual distribution of registered voters…but kudos to CNN for overloading the ‘Independent’ bucket in this “fake poll” rather than the Democrat bucket…much smarter strategy but still fake. 

Among the entire sample, 30% described themselves as Democrats, 25% described themselves as Republicans, and 42% described themselves as independents or members of another party.

Irrespective of the ‘fakeness’, here are the results as presented by CNN:

 

Not surprisingly, MSNBC seized upon the fake poll results this morning to gloat about the Trump’s ‘sad’ numbers.  But it was, Rick Tyler, a former campaign spokesman for Ted Cruz turned MSNBC political analyst, who took the direness of the low, if fake, poll numbers a step further saying that Trump should be placed on “24-hour suicide watch”.

“Joe, if I were a political consultant looking at a candidate who had these kind of numbers, I’d have him on 24-hour suicide watch.  These numbers are not good. They don’t look recoverable.”

 

“The administration and the vice president can complain about the New York Times story but we wouldn’t have this story if the president’s polls numbers were in the mid fifties, high fifties, or low sixties.”

 

Of course, if that name, Rick Tyler, sounds familiar it’s probably because he’s the guy who was fired last year from the presidential campaign of Ted Cruz after literally spreading “fake news” about Marco Rubio.  Here’s a quick recap from Politico:

Ted Cruz on Monday asked for the resignation of top aide Rick Tyler, who he accused of a “grave error of judgment” for promoting a false story that questioned Marco Rubio’s faith.

 

The story and accompanying transcript from The Daily Pennsylvanian, a student newspaper, said Rubio had walked by a Cruz staffer on Saturday who was reading a Bible, and told him it didn’t “have many answers in it.”

 

Tyler, Cruz’s communications director, posted the story on Facebook on Sunday, but later deleted it and apologized after a Cruz staffer said Rubio didn’t make any such comment. But Cruz decided greater action was needed.

 

“Our campaign should not have sent it. That’s why I’ve asked for Rick Tyler’s resignation,” Cruz told reporters in Las Vegas, where he was campaigning ahead of Tuesday’s Nevada caucuses.

But, it took less than one week for MSNBC to decide that Tyler’s skills in spreading misinformation were a perfect fit for their ‘news’ organization and so they made him an offer.  Per the Washington Times:

Rick Tyler, the former Ted Cruz campaign spokesman who was fired this week for circulating a fake story about Marco Rubio, announced Friday that he has been hired as a contributor for MSNBC.

 

Mr. Tyler will make his first appearance Friday at 5 p.m. ET on “Meet the Press Daily,” Mediaite reported.

 

“[I]’ll be on Meet the Press Daily with @chucktodd for the first time as an @MSNBC contributor. I hope you’ll watch,” he tweeted Friday afternoon. His Twitter profile description now reads, “MSNBC Contributor.”

Meanwhile, all of the above will only play to the benefit of Trump in 2020 as the constant flow of ‘fake news’ and ‘fake polls’ will serve to bolster his support among voters who are fed up with the mainstream media and their loose affiliation with facts.  Alas, one has to wonder whether maybe that is actually their goal…no one is better for their ratings than President Trump.

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WTI had coiled up today, closing lower, ahead of tonight's API data. After last week's API build and small DOE draw, hope was high that the trend of larger draws would continue and it did with API reporting a larger than expected crude draw (-7.839mm vs -2.2mm exp). However, a susprise build in gasoline inventories took the shine off and the machines could not decide whether to buy or sell.

 

API

• Crude -7.839mm (-2.2mm exp)
• Cushing +319k
• Gasoline +1.529mm (-1.5mm exp)
• Distillates -157k

Last week's much smaller than expected draws across the board was followed by an algo-confusing big draw in crude and surpriose build in gasoline this wekl…

WTI tumbled at the NYMEX close, testing stops below $49 but hovered there into the API print…then kneejerked higher but then gasoline saw a surprise build and the gains disappeared…

"There just isn’t enough confidence in OPEC yet to get us above $50. That’s the big problem," James Williams, economist at WTRG Economics in London, Arkansas, says. 

"We’re in the last big month of the driving season and the question is, can OPEC balance the lower fall and winter demand?"

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Via MauldinEconomics.com,

Once again I start with a warning: A recession is eventually coming and a financial crisis with it. There is a real potential for it to come soon, although serious tax reform could delay it.

But sooner or later, the pressures of too much government debt and too many government promises, plus growth that is continually grinding slower, will break out into a recession.

There is always another recession.

You can’t run your life and business as if you expect one to happen tomorrow, but you can make contingency plans. With each passing day, recession gets closer, but that’s no reason to be fearful if you’re prepared.

Troublesome Facts

The industrious Michael Lebowitz of 720Global performed an invaluable service last week by assembling “22 Troublesome Facts” behind his reluctance to follow the bullish herd.

Most have helpful source links, too. Here’s a short recap:

• The S&P 500 cyclically adjusted price-to-earnings (CAPE) valuation has only been higher on one occasion, in the late 1990s. It is currently on par with levels preceding the Great Depression.
• Total domestic corporate profits (w/o IVA/CCAdj) have grown at an annualized rate of just .097% over the last five years. Prior to this period and since 2000, five-year annualized profit growth was 7.95%. (Note: Period included two recessions.)
• Over the last 10 years, S&P 500 corporations have returned more money to shareholders via share buybacks and dividends than they have earned.
• At $8.6 trillion, corporate debt levels are 30% higher today than at their prior peak in September 2008.
• At 45.3%, the ratio of corporate debt to GDP is at historical highs, having recently surpassed levels preceding the last two recessions.

In short, US corporations are simultaneously more indebted, less profitable, and more highly valued than they have been in a long time.

Plus, they are intentionally making themselves more leveraged by distributing cash as dividends and buying back shares instead of saving or investing that cash.

Yet investors cannot buy their shares fast enough. Maybe this will end well… but it’s hard to imagine how.

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Disney served a big surprise moments ago when it reported reported Q3 revenue of $14.24 bn that missed the average analyst estimate, $14.42, even as Q3 EPS of $1.58, above the $1.55 expected.  That was not the surprise: what was is that Bob Iger’s entertainment giant just made what was until recently a simmering war with Netflix, hot when the firm announced it would end its streaming act with Netflix, pulling all of its movies, and that instead it would launch an ESPN video streaming service in 2018.

The platform which will feature about 10,000 sporting events each year, will have content from the MLB, NHL, MLS, collegiate sports and tennis’ Grand Slam events.

The announcement from Disney, which is now hoping to become more of a streaming company like Netflix, comes at a time when Netflix is spending billions of dollars on content, and is hoping to become more of a programming company like Disney.

From the press release:

The Walt Disney Company today announced that it has agreed to acquire majority ownership of BAMTech, LLC and will launch its ESPN-branded multi-sport video streaming service in early 2018, followed by a new Disney-branded direct-to-consumer streaming service in 2019.

 

Under terms of the transaction, Disney will pay $1.58 billion to acquire an additional 42% stake in BAMTech—a global leader in direct-to-consumer streaming technology and marketing services, data analytics, and commerce management—from MLBAM, the interactive media and Internet company of Major League Baseball. Disney previously acquired a 33% stake in BAMTech under an agreement that included an option to acquire a majority stake over several years, and today’s announcement marks an acceleration of that timetable for controlling ownership.

 

The media landscape is increasingly defined by direct relationships between content creators and consumers, and our control of BAMTech’s full array of innovative technology will give us the power to forge those connections, along with the flexibility to quickly adapt to shifts in the market,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. “This acquisition and the launch of our direct-to-consumer services mark an entirely new growth strategy for the Company, one that takes advantage of the incredible opportunity that changing technology provides us to leverage the strength of our great brands.”

 

The ESPN-branded multi-sport service will offer a robust array of sports programming, featuring approximately 10,000 live regional, national, and international games and events a year, including Major League Baseball, National Hockey League, Major League Soccer, Grand Slam tennis, and college sports. Individual sport packages will also be available for purchase, including MLB.TV, NHL.TV and MLS Live.

 

With this strategic shift, Disney will end its distribution agreement with Netflix for subscription streaming of new releases, beginning with the 2019 calendar year theatrical slate.

 

Plans are for the Disney and ESPN streaming services to be available for purchase directly from Disney and ESPN, in app stores, and from authorized MVPDs.

The announcement has sent both its and NFLX’s shares tumbling.

Meanwhile, for those interested, this is what else DIS reported, courtesy of Bloomberg:

• 3Q Cable Networks operating profit $1.46 billion, estimate $1.59 billion (Bloomberg News, average of 3)
• 3Q Cable Networks revenue $4.09 billion, estimate $4.16 billion
• 3Q media networks revenue $5.87 billion, estimate $5.88 billion
• 3Q parks & resorts revenue $4.89 billion, estimate $4.83 billion
• 3Q studio entertainment revenue $2.39 billion, estimate $2.34 billion
• 3Q consumer/interactive revenue $1.09 billion, estimate $1.23 billion
• 3Q media networks operating income $1.84 billion, estimate $1.96 billion
• 3Q parks & resorts operating income $1.17 billion, estimate $1.11 billion
• 3Q studio entertainment operating income $639 million, estimate $642 million
• 3Q consumer/interactive operating income $362 million, estimate $376 million

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"Unleash Hell…"

 

It seemed like a done deal early on as the panic-buying sent stocks soaring to new record highs but some North Korea headlines and Jeff Gundlach's warnings seemed to turn the market and investors were in tenterhooks into the close to see if VIX-clubbing could keep the Dow winning streak alive…But then Trump dropped the "fire and fury" line and all hell broke loose…VIX >11!!

 

A big short-squeeze, extended by JOLTS, sparked panic-buying into and beyond the European close but it soon faded and stocks clung to the unch-line until President Trump dropped the "Fire and Fury" speech…

Seriously…

Brink of nuclear war. Dow down 31 points

— RANsquawk (@RANsquawk) August 8, 2017

Futures show the crazy swings best…

 

The S&P's lack of movement continues…for the 15th day

2474, 2473, 2473, 2470, 2477, 2478, 2475, 2472, 2470, 2476, 2478, 2472, 2477, 2481… 2474

 

FANG Stocks dumped, erasing yesterday's gains…

 

Interestingly, USDJPY and S&P Futs decoupled shortly after North Korea headlines… and by the close, stock traders had been forced back to reality…

 

Clear safe-haven buying in bonds and bullion when Trump dropped the "fire and fury" speech…

 

The Dollar Index ramped higher on JOLTS data, running stops from Friday's payrolls spike, then fading to close marginally higher…

 

Treasury yields rose on the day but Trump's North Korea tirade sparked some safe haven buying…

 

The curve steepened with 30Y underperforming…

 

 

Gold spiked back up to unchanged on the Trump comments…

 

WTI closed lower, coiling up into the API data tonight..

 

Still we are sure this is just dip in stocks that should be bought…

Because the disconnect between hope and reality has never been so wide.

The exuberant-sounding earnings growth (thanks to depression-like base effects) are not showing up in forward-looking expectations for growth…

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Speaking at a press event at his golf resort in Bedminster, N.J., President Trump offered a stern warning to the rogue dictator of North Korea, Kim Jong Un, saying that he “best not make any more threats to the United States” or they “will be met with fire and fury like the world has never seen.”  Per Bloomberg:

“North Korea best not make any more threats to the United States.  They will be met with fire and fury like the world has never seen.”

“He has been very threatening beyond a normal statement.  And, as I said, they will be met with fire, fury, and frankly power, the likes of which this world has never seen before.”

.@POTUS: “North Korea best not make any more threats to the U.S. They will be met with fire and fury like the world has never seen.” http://pic.twitter.com/nUjWck9aGk

— Fox News (@FoxNews) August 8, 2017

 

Of course, first thing this morning we reported that according to a 500-page report by the Japanese Defense Ministry, North Korea may now be in possession of a miniature nuclear warhead. That said, the report did not move the market because the Japanese report was largely inconclusive and did not claim with certainty that this is the case.

Shortly thereafter, the exact same narrative escalated when the WaPo echoed what Japan said, only it now “confirms” that North Korea has successfully produced a miniaturized nuclear warhead that can fit inside its missiles, “crossing a key threshold on the path to becoming a full-fledged nuclear power, U.S. intelligence officials have concluded in a confidential assessment.”

As the WaPo added, the analysis completed last month by the Defense Intelligence Agency came on the heels of another intelligence assessment that sharply raises the official estimate for the total number of bombs in the communist country’s atomic arsenal.

“The IC [intelligence community] assesses North Korea has produced nuclear weapons for ballistic missile delivery, to include delivery by ICBM-class missiles,” the assessment states, in an excerpt read to The Washington Post. The assessment’s broad conclusions were verified by two U.S. officials familiar with the document. It is not yet known whether the reclusive regime has successfully tested the smaller design, although North Korean officially last year claimed to have done so.

It seems the President has potentially had some extra time to catch up on Game of Thrones during his vacation…

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(GLOBALINTELHUB.COM) — Dover, DE 8/8/2017 — Global Intel Hub exclusive interview — Elite E Services sat down with Mike Connor, Principal and Senior AP of Alpha Z Advisors, LLC – a trading advisor offering alternative investments based on strategies incorporating research on price anomalies, behavioral biases and institutional practices. In November of last year, Alpha Z Advisors LLC was ranked #1 Options Strategies Category by Barclay Hedge, a service that tracks funds’ strategies. So we wanted to learn more about on the Alpha Z Advisors strategy, as we have always supported options as a great way to not only hedge investments but also provide additional alpha to any portfolio. Also, futures options are generally traded on regulated exchanges – unlike FX which are mostly traded over the counter (OTC).

Who is Mike Connor?

Professional risk manager and former member of the Chicago Mercantile Exchange, who has more than 40 years’ experience in the futures and options industry.

What is the story behind Alpha Z Advisors?

Professor William Ziemba started Alpha Z Advisors, LLC with trading capital from friends and family. The initial investors were individuals he knew from the academic world in addition to a few referrals from the initial investors. The fund has grown in size from trading profits from the initial capital without attracting new investors.

How has the performance been?

2015 had great performance, more than 100% return, but it probably will never happen again due to a management decision to reduce initial margin to equity risk.

Why has it been so consistent?

The fund primarily trades options based on CME’s S&P 500 E-mini contract. Trading centers around the extreme prices of puts on the E-mini contract. The big money in trading options is made from being long, but returns are inconsistent (but the risk is usually very well controlled). The consistent money is made by being short options, but it comes with risk, and to stay in the game the risk has to be controlled.

How do you control the risk?

By properly hedging the positions either with other options or a futures position, and by margin to equity control. Short (selling) options positions are no different than an insurance company policies – you are selling price insurance. Like any insurance company, we’re going to have occasional disasters, like Katrina – but they should be manageable. Over a long time horizon, well managed market disasters should not prevent us from continuing to perform. We have had our share of ups and downs, and fortunately we have been able to survive all drawdowns. Good risk control and position sizing are the most important factors in any trading campaign.

What factors may impact the strategies’ performance?

Implied Volatility. Volatility is opportunity, but left unchecked it can be a horrible threat.

Considering the results, why do you think there’s not larger AUM?

Until recently we have not solicited publicly. This is our first concentrated effort at soliciting investors. In addition, we put together a minimum account size so high ($250K for the managed account, $100K for the fund). Our account size should eliminate many potential investors. We are looking for sophisticated investors that can take a part of their portfolio and take greater risk for a higher return.

How can investors ‘prove’ that the performance is ‘real’ – is there an institutional My FX Book ? There’s been a lot of CTA frauds that were real CTAs but used fake performance to lure investors – what assurances can we offer them about Alpha Z?

All the accounts – all the funds’ assets – all the performance results are compiled every month by an independent CPA firm. The statements themselves can be verified by the FCM.

Positions are manually stress-tested intra-day.

What makes Alpha Z Advisors LLC different than other CTAs?

I’m not sure if that’s the case, we have a very professional trading plan. You can go to Amazon and buy books published by our founder Dr. William Ziemba, actually he’s published more than 50 books on statistical abnormalities and opportunities in the stock market. It certainly does not mean we cannot lose, or have losing open positions – we are going to have losing positions there is no way around it. But overall, if we can control the risk and keep margin to equity at a reasonable level we should be able to survive during the bad times. We have, I think, enough excess margin to sit through a significant rise in implied volatility and still survive, if the positions and margin to equity can be properly controlled. Like any market position whether it is options or futures an unexpected giant gap opening is always a threat to open market position’s stability.

What makes the strategy different?

Trades are well positioned and I believe are market entry timing is very good. Our exposure is laid out over a broad time horizon (we don’t trade in nearby month, for example). If futures were a bullseye, you’d have to hit the target almost dead center to make a profit, with options, you can just hit the wall and still make a profit – of course, only with properly controlled risk and other parameters. I do not know how other CTA’s manage their positions and stress test their market risk, but I am confident our process is robust. What we do is not magic, it’s simply neutralizing the risk as much as possible, and there is a number of ways we accomplish that. It is all about understanding what the options can do if they move against you, and how you can respond adverse market activity.

The execution is done by a professional service. One way we keep our costs down other than accounting, is to try and soft dollar expenses through a soft dollar basis.

Customers are free to choose any brokerage house they want that clears at the CME. If customers do not have any preference, we are happy to set them up with our preferred FCM.

For more information contact:

Mike Connor

312-470-6260

Or visit http://ift.tt/2hCtt0M

This article/interview is for information/educational purposes only and is privileged, confidential and proprietary. This article/interview is NOT an offer to sell or a solicitation of any investment products or other financial product or services, is NOT an official confirmation of any transaction, or an official statement. Past performance is not indicative of future results. There is a substantial high and unlimited level of risk of loss in trading commodity futures, options, options writing, equities and off-exchange foreign currency products; such trading is not suitable for all investors.  Investors should only invest money they can afford to lose.

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Ask any farmer in California what keeps them up at night and we would guess that nearly all of them would list ‘labor shortages’ and ‘water access’ as their top two concerns.  Ironically, despite over 90 million American citizens choosing to sit out of the labor force and California having one of the highest minimum wage rates in the country, farmers in the Golden State struggle every year to find enough labor to keep fruits and vegetables from literally rotting on the vine.

Meanwhile, as the new administration promises to crack down on illegal immigrants, farmers are feeling the labor shortages in 2017 more than ever.  As the Wall Street Journal notes today, many farmers have turned to the H-2A agricultural visa program to recruit temporary workers from Mexico but the process is generally described as “bureaucratic, costly and time-consuming.”

In the first nine months of fiscal 2017, which began Oct. 1, the U.S. Labor Department certified more than 160,000 temporary workers—the bulk of them from Mexico—to harvest berries, tobacco and other crops in the U.S. under the H-2A agricultural visa program. That was up 20% from the period a year earlier.

 

The annual issuance of H-2A visas nearly doubled from 85,248 in fiscal 2012 to 165,741 in 2016. The U.S. doesn’t cap the number of these visas.

 

Outside of agriculture, use of another type of seasonal-work visa also has surged in response to increased U.S. demand for unskilled laborers such as hotel housekeepers. The Department of Homeland Security in July raised the annual cap on H-2B visas by more than 20% to 81,000. The majority of workers receiving this type of visa also are from Mexico.

 

But, despite its flaws, farmers say that any efforts to further curtail temporary agricultural visas would only result in more product losses for farmers and higher grocery bills for American consumers.

American farmers for several years have voiced concerns about labor shortages, often paired with complaints about the H-2A visa program, which many see as overly bureaucratic, costly and time-consuming. The program requires employers to pay for food, housing and transportation for seasonal guest workers. Still, most farmers say the program is crucial to the U.S. agricultural industry.

 

“It’s extremely burdensome,” but cutting the program would “bring the industry to its knees” because there aren’t enough U.S.-born farmworkers, said Steve Scaroni, owner of large-scale farms in several states and founder of Fresh Harvest, one of the largest recruiters of H-2A workers in the U.S. “Within a week there wouldn’t be salad in the store” if the program was canceled, he said.

 

In 2015, farmers in California’s Santa Barbara and San Luis Obispo counties, which grow roughly 30% of the strawberries in the U.S., reported $13 million in losses because they lacked enough labor to harvest their crops in a timely manner.

 

Last year, vegetable farmers in the two counties reported they had 22% fewer workers than needed on average, while berry farmers put the worker shortage at 26%, according to a survey conducted by a local growers association.

Of course, as we’ve pointed out numerous times before, America doesn’t really have a “labor shortage” at all, but rather, a massive skills and/or motivation gap resulting from decades of American youth being indoctrinated with the notion that focusing on obtaining a skills-based trade job, rather than going to college, was somehow demeaning, racist and/or misogynistic. 

You know, because throwing 10’s of thousands of dollars at millions of high school kids who will use their taxpayer-subsidized student loans for hedonistic, binge-drinking spring break trips to Cancun, all while ‘earning’ a 1.5 GPA in anthropology from a state school and then returning to mom’s basement with no job after graduation, is just so much more enlightened and progressive.

Meanwhile, the cost of that progressivism is an economy that has ~95 million people who have voluntarily taken themselves out of the labor force, many because they simply don’t possess the right skills or are unwilling to take jobs that they’ve been convinced are ‘demeaning.’

 

For those who still aren’t convinced….perhaps you have another explanation for why over 30% of the ~75 million 18-34 year olds in this country (roughly 22.5 million people) are currently living at home with mom and dad while everyone from homebuilders to farmers are struggling to find workers?

 

Of course, in the end, labor restrictions and soaring minimum wages will simply result in more of America’s food production being outsourced to Mexico and South America.  That said, something tells us that the progressives in California who jammed through their $15 minimum wage and essentially made it impossible to farm fresh fruits and vegetables in their state are not going to be all that happy when they learn about Mexico’s environmental regulations, or lack thereof, on food production.

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With Q2 earnings season rapidly approaching its end, Bank of America points out a curious observation: stocks that beat earnings expectations are not getting “rewarded” with higher prices. This is the first time this has been observed in 17 years  – the last time the market seemed oblivious to corporate upside was in 2Q 2000… just before the Tech Bubble burst. As BofA warns, “this could be a warning sign that equity market expectations and positioning more than reflect the good results.”

Adding to peak valuation concerns, BofA’s quant strategist Savita Subramanian also expects full-year EPS growth to decelerate from 8% in 2017 to 5% in 2018, and redundantly adds that “the stock market may not react well to decelerating earnings.” That’s one way of putting it.

Some more details on this notable “market peak” phenomenon:

Companies which beat on EPS and sales have performed in-line with the market the subsequent one and five days – the first time we’ve seen no reward for beats since 2000.

 

 

 

Companies which missed on both metrics have underperformed by 3ppt the subsequent one and five days – greater than the historical average underperformance of 2ppt.

 

 

Punishment for misses has been greatest in Tech – which is extremely crowded vs. history by active funds. The reward for beats has generally been muted (or nonexistent) across all 11 sectors, but is so far largest in Consumer Discretionary on a one-day basis (1.1ppt) and Real Estate on a five-day basis (1.5ppt). Performance spreads have been muted based on guidance as well (Table 4).

 

Now as noted above, one possible explanation for this phenomenon of no earnings season upside for the beaters, coupled with substantial downside for everyone else is that it “could be a warning sign that equity market expectations and positioning more than reflect the good results.“

Alternatively, as we first discussed last week, another possibility for the bifurcated earnings response is due to the change in market structure itself.

One week ago, BofA’s Subramanian again looked at the response of stocks which missed EPS estimates, and found two dramatically different outcomes for stocks with high vs low passive ownership. This is how she describes her findings:

Not only can crowding by active managers suggest risk to stocks, but high-passive ownership can matter, particularly during earnings season. Over the past seven quarters (including the 2Q earnings season so far), stocks with high passive ownership that missed on EPS and sales have underperformed those with low passive ownership by 1.5ppt on average during the following day, and the spread has widened significantly during recent quarters. This increased performance spread may be attributable, in part, to lower “true float” in these stocks, which appears to have driven increased volatility.

The increasingly disproportionate adverse reaction of highly passive-owned stocks is shown in the chart below: it is most evident in Q2 2017 earnings.

BofA’s take, which can easily be tested for validation purposes, presents various arbitrage opportunities chief among which is creating a basket of high passive ownership stocks, and betting on sharp declines either through single-name short positions or puts while avoiding low passive ownership names, with expectations of this skewed return profile.

One potential hurdle is that this earnings season – which is now almost over – companies with notable misses have been relatively few, although if this pattern persists, it should provide significant alpha opportunities during the Q3 earnings season, when the overall quality of earnings is expected to decline substantially as the base effect of last year worst quarter will be in the rearview mirror, while the much anticipated surge in energy earnings will have trouble materializing if oil fails to trade solidly in the mid-$50 range, not to mention the risk of either inflation finally creeping higher or the Fed following through with its balance sheet unwind promise.

In any case and perhaps most troubling to the bulls, yet another ghost from a recent market crash has emerged, and whatever the underlying cause, it may haunt traders until the bitter end of the current market cycle which, increasingly more are starting to admit, will be quite dire to most P&Ls.

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